Schnadt v. Davis

• Decision Date: 17 April 1900
• Parties: SCHNADT et al. v. DAVIS.
• Court: Illinois Supreme Court

185 Ill. 476

57 N.E. 652

SCHNADT et al.

v.DAVIS.¹

Supreme Court of Illinois.

April 17, 1900.

Appeal from appellate court, First district.

Suit by Charles W. Davis against Anna M. Schnadt and others. From a judgment of the appellate court affirming a decree for plaintiff (84 Ill. App. 699), defendants appeal. Reversed.W. N. Gemmill, for appellants.

Charles H. Hamill, for appellee.

This was a bill in chancery filed by appellee, Charles W. Davis, for a decree foreclosing a certain trust deed executed by appellants, Anna and Frederick Schnadt, to Aaron B. Mead, as trustee, to secure a certain principal note in the sum of $2,500, and interest coupon notes attached, signed by said mortgagors and payable to one John L. Healy; the notes, as the bill alleged, having been assigned to the complainant. The substance of the answer to the bill was that said Charles W. Davis, the complainant in the bill, and the said John L. Healy, whose name appears as payee of the notes, are employés of the firm of Mead & Co., and neither has or ever had any real interest in the indebtedness, but Healy, as payee of the note, and Davis, as present holder thereof, are but representatives of the said firm of Mead & Co.; that the said trustee, Aaron B. Mead, is, and was when the note and mortgage or trust deed were executed, a member of the firm of Mead & Co., the other partner in said firm being one Albert L. Coe; that on July 2, 1892, appellant Anna M. Schnadt bought the premises described in the mortgage, being then unimproved city lots, from the firm of Mead & Co., and arranged with that firm for a loan of $2,500 wherewith to construct a building on said lots; that said firm agreed to make the loan, but on condition the same should be paid by them to the borrowers in installments as the work on the buildings progressed; that one A. W. Syratt was then in the employ of the said Mead & Co. as manager of a branch office of the firm; that said branch office was located nearer the home of appellants and nearer the proposed new buildings than was the principal office, and it was arranged the said Syratt should determine the amount that should be paid appellants from time to time as the work on the buildings proceeded, and that the payments to appellants of such installments should be made through said Syratt, on the written order of the appellants; that said Healy was then in charge of the loan department of said firm of Mead & Co., and the note described in the bill was drawn payable to him and signed by appellants, and the mortgage described in the bill was then executed, and both delivered to the firm of Mead & Co.; that no money was then paid to appellants, but that the same was to be paid from time to time as the work progressed on the buildings aforesaid; that various amounts were afterwards paid by said Mead & Co. on written orders of appellants, which they executed and delivered to said Syratt, as manager and agent of said Mead & Co.; that said Syratt forged the names of appellants to orders for payments out of said sum to the amount of $1,700, and that appellants did not receive any part of the moneys drawn on said forged orders; that said Syratt, when he foreged said orders, was acting as the representative of said firm of Mead & Co., and was in charge of the branch office of that firm; that said Syratt was arrested and indicted for said forgeries, and thrown into the jail, and that said Mead, acting for said Mead & Co., represented to appellant Frederick Schnadt that the firm had sustained other heavy losses by reason of the wrongful conduct of said Syratt, and that he wished to conduct negotiations for a settlement for all such losses; that said Mead & Co. did settle with said Syratt, and received notes secured by mortgages on property belonging to relatives of said Syratt to secure the amount of the defalcations and forgeries of Syratt, including amounts received by Syratt on orders to which the names of the appellants had been forged. The answer further averred the appellants had sustained damages by reason of the failure of Mead & Co. to pay them the money as borrowed, etc., in an amount equaling the sums paid them by said Mead & Co., and averred there was nothing due from them on the note. Replication was filed to the answer. The cause was referred to a master in chancery, with directions to take and report the proofs, together with ‘his opinion of the law and the evidence.’ Afterwards, on motion of the solicitor for the complainant, the following order was entered: ‘Ordered, that the defendants, Anna M. Schnadt and Frederick L. Schnadt, submit or cause to be submitted to Thomas Taylor, Jr., Esq., one of the masters in chancery in this court, a stenographer's transcript of the evidence taken on behalf of defendants before said master on the reference herein, on or before the 1st day of March, A. D. 1898, and that in default thereof the said master shall make up and return to this court his report upon the evidence a transcript of which shall have been then submitted to him, and none other.’ The appellants filed with the master the following written objections, which objections were afterwards, by agreement of parties, presented to the master's report in the circuit court, the language being changed for that purpose: ‘First. The complainant introduced as witnesses in support of his case in this cause Aaron B. Mead, John L. Healy, and Henry W. Buckingham, all of whom were examined on behalf of the plaintiff and cross-examined on behalf of the defendants; but upon making up the master's report no part of the testimony of Aaron B. Mead or J. L. Healy has been written up or taken into consideration by the master or reported in this cause. Second. The defendants offered as a witness in this cause Frederick L. Schnadt and A. W. Syratt, both of whom were examined on behalf of the defendants, and Frederick L. Schnadt was cross-examined at great length by the complainant, such cross-examination occupying two whole sessions before the master, of one-half day each; but no part of such testimony has been considered by the master or is presented in the master's report, or his certificate of evidence filed in this cause. Third. The only testimony considered by the master and contained in his report is that of Henry W. Buckingham, although four other witnesses testified in this cause before the master. Fourth. A rule was entered upon the defendants herein to close their proofs before the master at a certain fixed date, and in conformity thereto the defendants appeared before the master and closed their proof, but did not hire a reporter, and complied simply with the order of the master concerning the taking of such testimony, and were not bound to cause such testimony to be written up and submitted to the master, or to pay for the same. Fifth. The complainant herein having submitted his proofs to Master Taylor for the purpose of having testimony taken on both sides of said cause, and having obtained a rule on the defendants to appear and submit to an examination before such master, is compelled to present all the evidence taken before the master to said master, before the report of the master can be made, and the master is bound to take into consideration, in making up his report, all the testimony taken before him. Sixth. None of the questions raised by the defendants concerning the forgeries of certain orders for the purpose of fraudulently obtaining money from the said defendants have been considered by the master, although such evidence was submitted to the master.’ The objections were overruled by the master. The master filed his report, with his conclusions, to the effect there remained due on the note given to Healy, and the interest thereon, $3,077.29, and for solicitor's fees the sum of $153.64. The report contains also the following statement: ‘Master's fee, this report, $50.’ The only deposition returned to the court with the report was that of Henry W. Buckingham, successor to said Healy as manager of the loan department of said Mead & Co., taken in behalf of the appellee. The certificate of the master, attached to the report, is as follows: ‘I hereby certify that the pages following this, and which are part of this report, contain all the testimony submitted to me in this cause, and was produced before me by and on behalf of the complainant.’ The objections presented to and overruled by the master were, by agreement of the parties and consent of the court, refiled before the chancellor as objections to the approval of the report, but were overruled, and decree entered in accordance with the action of the master. This is an appeal from the judgment of the appellate court affirming the decree.BOGGS, J. (after stating the facts).

Section 39 of chapter 22 of the Revised Statutes, entitled ‘Chancery,’ provides a cause may be referred to the master in chancery to take and report the evidence, with or without his conclusions thereupon. In the case at bar the cause was referred to the master to take the proof in the cause and report the same, together with his ‘opinion of the law and the evidence.’ It was the duty of the master, under this order of reference, to cause the witnesses to be brought before him and examined, to have their testimony reduced to writing, and to embody such testimony in his report, together with his conclusions as to the facts established by the testimony and his opinion as to the rights of the parties under the law applicable to that state of facts. ‘The document exhibiting the referee's or master's findings and conclusions is called his ‘report,’ the object of which is to show the proceedings which have been had under the order of reference, the evidence which has been taken, and the findings and conclusions reached by the master or referee, according to the terms of the order of reference, in such a manner that intelligent action may be had thereon by the court.' 17 Enc. Pl. & Prac. 1033....